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Improving Financial Literacy: From Corporate Finance to Personal Finance
This paper provides an overview of the literature on financial literacy. It covers the initial measurement that created the Big Three questions and measures of personal finance knowledge featuring twenty-eight questions. It shows that levels of financial literacy are very low and have not been improving over time. This is true not just in the US but in countries worldwide. These findings matter because financial literacy is conducive to savvy financial behaviors, from holding precautionary savings to planning for retirement to many other financial decisions. Personal finance courses have been added to high school and college curricula, and the evidence indicates they are useful initiatives to improve financial knowledge and downstream behavior.
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